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1981 (7) TMI 125
... ... ... ... ..... Ajmera, is incorrect. 6. However, we are at a loss to understand how s. 4(1A) could be applied in this case. This section applies only to individuals. The WTO having granted the status of HUF to the assessee, cannot apply the provisions of s. 4(1A). In fact by applying s. 4(1A) he excluded a portion of the wealth which ought to have been included in the net wealth of the assessee, assuming that the status was HUF. We also find that the AAC noticed this lacuna and enhanced the assessment. We are, therefore, not able to understand how the department is aggrieved by this order. If the WTO had determined the status wrongly, it cannot be corrected at this late state. Hence although the AAC has applied wrongly the principles of Hindu Law he has come to the correct conclusion regarding application of s. 4(1A). We uphold his finding that the s. 4(1A) is not applicable in the instant case for entirely different reasons. 7. In the result, the appeals filed by the revenue are dismissed.
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1981 (7) TMI 124
... ... ... ... ..... O in duty, bound to give exemption which was due to the assessee in law. The ld. Deptl. Rep. relied on the decision of the Supreme Court in the case reported in Addl. CIT vs. Gurjargravures P. Ltd. 1978 CTR (SC) 1 (1978) 111 ITR 1 (SC) and submitted that the assessee can not agitate this point. 3. We find that the decision of the Supreme Court referred to above is not applicable in the assessee s case. In the first instance all the material facts were there already and the WTO should have considered the matter correctly. Secondly, the AAC was also not right in not examining the legal position, since under the law an asset exempt from wealth-tax can never be included in the assessable total wealth, particularly when the matter has been agitated before him. Under these circumstances, we consider it fit to set aside the order of the AAC and restore it to him for re-consideration of the issue. 4. In the result, the assessee s appeal is treated as allowed for statistical purposes.
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1981 (7) TMI 123
Payment Not Deductible ... ... ... ... ..... under section 154(7). We have, therefore, to hold that the Commissioner (Appeals) has entirely misunderstood the scope of the section and allowed relief of Rs. 35,000 to the assessee. This part of the Commissioner (Appeals) order is, therefore, set aside. 5. However, we find that the Commissioner (Appeals) has not given any findings whether rule 6DD(j) applies in respect of the three payments made in the year 1975. His finding was confined only with regard to the first payment made in September 1974. It is necessary that he should now give a finding regarding the three payments amounting to Rs. 35,000 made in the year 1975. We, therefore, set aside the order of the Commissioner (Appeals) and restore the appeal to him for giving decision on merits, i.e., whether the payment of Rs. 35,000 made in February 1975 qualities for deduction under section 40A(3) in the light of the conditions prescribed under rule 6DD(j). 6. In the result, the departmental appeal is treated as allowed.
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1981 (7) TMI 122
Transfer Of Assets ... ... ... ... ..... f the section. 5. In this connection, we refer to the decision of the Madras High Court in the case of S. Nagnathan v. CWT 1975 101 ITR 227 where the assessee had transferred the property to his wife. The property was included in the net wealth of the assessee under section 4 of the Wealth-tax Act. However, the exemption under section 5(1)(iv) of the said Act had not been given on the ground that the property did not belong to the assessee. The Court held that the assessee could not be put in a worse position than he would have been if he had not transferred the property and allowed deduction under section 5(1)(iv). In other words, they approved the calculation of the net wealth in the hands of the transferee as if she were the assessee and then directed that the net result alone could be included in the hands of the transferor under section 4. This decision gives indirect support to the proposition that we have laid down. 6. In the result, the assessee s appeal is dismissed.
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1981 (7) TMI 121
... ... ... ... ..... , 1974 and 1st Nov, 1975, respectively, for the three assessment years, under consideration, and the wealth-tax returns were filed almost on the same dates for the respective assessment years. Thus, it is evident that the assessee cannot be held to be guilty of conscious disregard of their legal obligations, besides the fact that they also filed application for extension of time. Besides the above, we have also noted that the WTO in his assessment orders has not recorded his satisfaction in respect of the late filing of the returns and neither has he indicated anything in the assessment orders that penalty proceedings u/s 18(1)(a) are to be initiated. This, in our view, is an additional ground for cancelling the penalties imposed by the WTO, besides the sufficient cause by the assessee for late filing of the return. In the result, the penalties imposed in respect of both the assessee for all the three years are cancelled and the appeals filed by both the assessee are allowed.
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1981 (7) TMI 120
... ... ... ... ..... n the income-tax proceedings. We have seen the agreements executed with Smt. R. M. Engineer and Shri A.K. Jain and Shri S.S. Pathak. A perusal of the agreements shows that Smt. Engineer was to receive commission 10 per cent of the sales and thereafter she was to pass over Rs.6,000 each to the two persons out of the commission credited to her account and that is what the assessee has done in the accounts. Thus, the disallowance of payment of commission was not called for by the authorities below. Hence the same is deleted. 4. So far as the disallowance of travelling expenses of Rs. 2,000 is concerned, we do not think there is much scope in the pleas put forth by the ld. counsel for the assessee. Be that as it may, since the assessee maintained vouchers for all such expenses and the ITO has not commented upon the non-verifiability of the expenses, we consider it proper to reduce the disallowance to Rs. 1,000. 5. In the result, the appeal filed by the assessee is partly allowed.
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1981 (7) TMI 119
... ... ... ... ..... rates shown by the assessee were 7 per cent and 6.9 per cent and the same were accepted except a token addition of Rs. 2,000 in 1974-75, thereby raising the rate to 7.2 per cent. In his explanation before the ITO the assessee stated that the asst. yr. 1976-77 was on the only year in which due to some price fluctuations there was rise in the G.P. rate, otherwise the G.P. earned in the asst. yr. 1977-78 continues to be the same as in the asst. yr. 1975-76. Besides the above the assessee pleaded that due to opening of some other shops, the assessee had to face keen competition and that is why he could not earn higher G.P. Thus, in view of the circumstances stated, the position of accounts being the same as in the earlier 3-4 years, we do not think there is any case for tinkering with the result shown by the assessee. Hence, we following the decision reported in Tax 50(6)-142 delete the addition sustained by the AAC. 3. In the result, the appeal filed by the assessee is allowed.
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1981 (7) TMI 118
... ... ... ... ..... Ahmedabad Bench of this Tribunal in ITA No. 823/Ahd./1977-78, Shri P. Bareda vs. ITO, CIR. I ward, 5 Baroda, reported at page 586 Issue Taxes and planning, dt. 15th June, 1978, which accepted the appeal of the assessee and clearly held the income as the income of the HUF constituting of the assessee and his wife. Accordingly we accept the appeal on this ground and direct the ITO to accept the status of the appellant as an HUF. 8. So far as the issues raised in ground Nos. not pressed by the ld. concerned, since the same were not pressed by the ld. counsel for the assessee we confirm the order passed by the CIT (A). 9. In respect of the issue raised ground No. 5 we may observe that since we have hold the status of the assessee as that of HUF the income earned by the assessee rsquo s wife on the sale plot could not be added under s. 64 of the IT act to the income of the assessee. Hence, the same is deleted. 10. In the result, the appeal filed by the assessee is partly allowed.
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1981 (7) TMI 117
... ... ... ... ..... r. 1970-71 placed before us by the ld. representative for the accountable person. The assessee filed return in the status of HUF while in the previous years the status was declared as Individual and assessed accordingly. It is represented that the assessee s father Sri V. Anjaneyulu and assessee s two brothers and himself constituted a joint family and there was a partition deed dt. 1st April, 1950 and from that time onwards, the assessee carried on business with the assets obtained on partition. I have examined the evidence produced by the assessee in this regard. Since the assessee did not have children, he was declaring his status as Individual and was accordingly assessed. It is contended that in view of the latest Supreme Court s decision it should be assessed in the Status of HUF consisting of himself and his wife. The assessee s is accepted. We have, therefore, no hesitation in upholding the order of the Appl. CED. 5. The departmental appeal fails and stands dismissed.
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1981 (7) TMI 116
Hindu Undivided Family, Assessability Of Income ... ... ... ... ..... tain share of profits he earned. The payments made to the sons would, therefore, fall under the category of expenditure for the purpose of business carried on by the assessee-HUF. The interest paid to the sons on amounts standing to their credit stands on the same footing. It is not the case of the revenue that the amounts so paid to the sons were unreasonable or excessive. In these circumstances, we are of the opinion that the conclusion arrived at by the AAC is correct for the reasons mentioned by us above. In this view of the matter, it is not necessary to consider the third question as to whether the income accrued to the BOI. The other rulings cited by the parties before us do not relate to the issue in this case. They relate to cases of sub-partnership, which is not the case here and also to cases of overriding title to income which is not also the case here. We have, therefore, not discussed them. 11. In the result, the appeal of the revenue fails and stands dismissed.
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1981 (7) TMI 115
... ... ... ... ..... ively for the performance of the duties. We are of opinion that at the Bank has required the assessee to reimburse it in respect of the possible personal use of the car by the assessee. Having regard to such possible user, the bank had obtained reimbursement from the assessee at the rate of Rs. 75 per month. When such reimbursement has been made for personal use, it could hardly be said that the bank had provide the assessee with a car for use by him otherwise than wholly and exclusively in the performance of his duties. Accordingly, the Tribunal came to the conclusion that the maximum amount of standard deduction admissible under s. 16(1) was Rs. 3,500 and Rs. 1,000. In view of the above mentioned decision, we hold that the order passed by the AAC in allowing full deduction under s.16(1) for all assessment years under consideration is quite correct and reasonable he once we are inclined to interfere with the order passed by the AAC. 6. In the result, the appeal is dismissed.
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1981 (7) TMI 114
... ... ... ... ..... incomes which are considered to be real incomes. We are of the view that since sufficient material is not available, the aspect of determining what would be the proper goodwill should be restored to the GTO who would go into the figures, consider the contentions of the assessee, apply well-accepted principles of evaluating goodwill with reference to figures of profits disclosed assessed etc. and would consider thereafter whether the figure of goodwill placed at Rs. 1,59,268 for half share is in order or whether it is excessive. In the event of its being excessive, to the extent of the excess, of course in computing the value of gift by the method adopted by the GTO and after substituting the values of property as determined by us, there would be an appropriate deduction This would have to be worked out by the GTO and we direct accordingly. 30. In the result since the assessee has succeeded on the legal ground, the appeal is allowed and the re-assessment as made is cancelled.
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1981 (7) TMI 113
... ... ... ... ..... s daughter Km. Pramila is said to be minor during the asst. yr. 1955-56 and is said to have attained majority in Jan., 1973. The setting apart of the ornaments is said to have taken place some time during 1956. It is not shown before us in what manner the said setting apart did take place. It is further felt that by setting part the ownership of the assets cannot change hands. The setting apart cannot be equated with transfer mentioned in s. 4 of the WT Act. The transfer pre-supposes the exchange of hands and, therefore, ownership. Moreover, the Tribunal in the case of the assessee himself therefore vide their order has negatived the assessee s claim. We see on justification for re-considering the issue afresh. Thus respectfully following the said finding of the Tribunal, we see no merit in the matter and the impugned order on the point begin correct warrants no interference and the same is, therefore, confirmed. 13. In the result, the assessee s appeals are partly allowed.
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1981 (7) TMI 112
For Concealment Of Income ... ... ... ... ..... dicated to the chartered accountant that there was something wrong in there being no sales at all for one month entirely. It is also for the purpose of such omissions being brought to the notice of the assessee that the assessee had in the past as well as in the previous year for this assessment year given the books of account to the chartered accountant for the purpose of the preparation of the statements and the return of income. The mistake that was committed by the assessee can only be considered to have been committed by the chartered accountant. In entrusting this part of the work to the chartered accountant, it must be held that the assessee has freed itself of a possible charge of gross negligence as contemplated in the Explanation to section 271(1)(c). 24. We, therefore, held that the assessee is not liable to penalty under section 271(1)(c). The penalty of Rs. 1,08,084 levied by the ITO and confirmed by the Commissioner (Appeals) is cancelled. The appeal is allowed.
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1981 (7) TMI 111
Reassessment, Limitation For Commencing ... ... ... ... ..... ion 59 of the Act is issued notwithstanding the fact that such notice may not specify the particular property in regard to which the allegation is made that it has escaped assessment. See Narasimha Rao v. Assistant Controller of Estate Duty, AP 1971 80 ITR 662 at p. 666, considered further at pages 581-582 and also at pages 585 and 586. 10. In view of the foregoing, we hold that the commencement of the reassessment proceedings which has resulted in the reassessment dated 4-8-1977 was barred by limitation as provided under section 73A. The Assistant Controller cannot be considered to have properly exercised the jurisdiction by issuing the notice under section 59 on 28-8-1974. The reassessment made cannot, therefore, be considered to have been validly made. It is, accordingly, cancelled. 11. Since we have held that the reassessment has not been validly made the other grounds raised along with the original memorandum of appeal are not considered by us. 12. The appeal is allowed.
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1981 (7) TMI 110
... ... ... ... ..... udgment and in view of our own consistent approach in the matter in various cases, which have also been accepted by the Revenue, we hold that the AAC fell in error in upholding the ITO s action of invoking the provisions of s. 40(b) of the Act to upheld additions of Rs. 8,718 in the first year and Rs. 6,175 in the second year. These additions shall be deleted from the assessment of the firm. 6. As far as the second issue is concerned, it has come up for adjudication before this Bench of the Tribunal in the assessee s own case for the asst. yr. 1974-75 in ITA No. 110/Chandi/79 dt. 7th Aug., 1980. Both the parties agreed that the contention and arguments recorded in the said order should be taken as having been advanced in these years also, such submission is accepted. Therefore, making our order dt. 7th Aug., 1980 as the basis, the common contention relating to the additions of Rs. 18,000 in each of the two years, is rejected. 7. In the result, the appeals are partly allowed.
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1981 (7) TMI 109
... ... ... ... ..... ities we are accepting. Particularly it was not even controverted that the onus of proving the firm as a benami, was squarely on the revenue. In this connection, Supreme Court judgment in the case of Dault Ram Rawat Mall is important. Similarly. we have not considered it necessary to deal within great length the Supreme Court judgment cited for the Revenue because it is not our finding or view that mere existence of a deed of partnership is a passport or talisma for obtaining registration benefits in terms of s. 185 (1)(a) of the Act and on that score the revenue s contention has been accepted by us. 22. On the material before us, we hold that the firm was entitled to registration which the ITO is directed to accord. We are recording a positive finding that the revenue has miserably failed to prove that the firm could be considered as a benami and in this regard it was entirely wrong to be presumptuous on the ITO s and the AAC s part. 23. In the result, the appeal is allowed
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1981 (7) TMI 108
... ... ... ... ..... 0 is permissible. In this case the legal expenses for income-tax purposes as shown in the accounts is only Rs. 2,743. There is no material for the ITO to hold that Rs. 7,200 is also for income-tax expenses coming under s. 80-VV. There cannot be any inference that whatever is paid to an auditor is for income-tax purposes coming under s. 80-VV. An auditor has many other work to do like supervision of accounts and advise the assessee to keep proper accounts and occasional checking of accounts to ensure its correctness. So the IT authorities were wrong in including this Rs. 7,200 for other legal expenses, applying s. 80-VV. Only Rs. 2,343 is connected with s. 80-VV. The other expenditure of Rs. 7,200 paid to the auditor has nothing to do with any of the matters specified in sec. 80-VV. It is clearly a business expenditure falling under s. 37 of the IT Act, 1961. So no disallowance of is called for. The disallowance Rs. 5,193 made is deleted. In the result, the appeal is allowed.
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1981 (7) TMI 107
... ... ... ... ..... on consultation incurred by an assessee does not become part of the proceedings. In fact, it is an expenditure incurred prior to the commencement of the proceedings. Thus the limitation imposed by s. 80VV does not apply to expenditure incurred on consultation. Such an expenditure being incidental to the carrying on of business, it was urged, should be allowed under s. 37 of the IT Act. The ld. Deptl. Rep. relied on the orders of the authorities below. We had occasion to consider this matter in ITA Nos. 927 and 1971 (Cal)/80, C Bench, order dt. 1st June, 1981. Relying on another decision of the Tribunal in ITA No. 2529(Bom) of 1978-79, we have held that the restriction under s. 80VV does not apply to proceedings prior to filing of the return. Following this order we hold that the assessee is entitled to a further deduction of Rs. 3,000 as claimed in its ground of appeal. The assessee further gets a relief of Rs. 3,000. 9. In the result, ITA No. 1509(Cal)/80 is partly allowed.
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1981 (7) TMI 106
... ... ... ... ..... uently, I consider that the lady was a partner of the firm in her own right and, therefore, cannot be considered as a Benamidar of anybody else. In this view of the matter, the ITO could not possibly be justified to refuse registration for both the years under consideration and such wrong action of the ITO was rightly negatived by the ld. AAC. 2.In the result, the revenue s appeals deserve dismissal. RAM RATTAN, A.M. There has been difference of opinion between the Members in the above appeals. The facts of the case have been set out in detail in the combined order. The following points are, therefore, being ground referred to the Hon ble President, IT Appellate Tribunal for being referred to 3rd Member of the Tribunal as required under s. 255(4) of the IT Act, 1961 Whether on the facts and in the circumstances of the case, Smt. Koshalya Bai was the Benamidar of another partner in the firm and consequently the firm was not entitled to registration under s. 185 of the IT Act.
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